Provider adoption of technology requires close monitoring for effective returns on investment 

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Healthcare providers across the entire healthcare continuum continue to make significant investments in technology – Enterprise resource planning (ERP) and electronic medical records (EMR) systems, telehealth, scheduling systems and remote patient monitoring, just to name a few of the many technologies supporting the sector. 

Hospital capital budgets used to be focused on buildings and equipment (“bricks and sticks”). In recent years, however, an increasing amount of the capital budget goes to technology. In the case of ERM systems, for many providers the jury is still out on whether they're seeing a return on that investment. 

Provider IT groups incur increasing operating costs related to larger (and likely more expensive) IT staffs, higher annual software and maintenance costs and ongoing consulting costs related to fixing bugs or upgrading specific reporting features.   

Using data effectively 

The upside to the IT investment by providers is the amount of data they now have at their fingertips; that’s also the downside. Having data is one thing but having data analysts on your staff that can go through and scrub the data, sort it and start to identify data trends is important. Any hospital considering an investment in a major ERM system should have a plan in place from day one as to how they’re going to best use the data. Without a plan, a provider will never get the full return on investment in that system. 

For example, a provider may install a new system but then wait a few years before they turn on the module where it writes receivables down to the net, or lets the provider know what the expected reimbursement is against the actual. Without turning on the module that monitors payments and helps ensure the provider is not losing money it is entitled to, the provider is not getting the full benefit of the technology.  

Software inventories 

Providers should regularly take an inventory of all the software they are paying for and make sure they are using it all. A piece of software that was a good purchase in the past may have become obsolete because of staff turnover or a system upgrade.  

As ancillary specialty providers become the target for many private equity (PE) investors, we're seeing a significant amount of investment in revenue cycle technology. What often happens is that a PE firm will acquire a platform company and then pursue various add-on acquisitions. The investor will be looking for best-in-class revenue technology to automate the billing process and make it more efficient. Interest in telehealth technology is also growing, especially in the physical therapy arena.  

One more area where technology investments are increasing relates to the hospital-at-home care delivery model. In part due to the difficulty that hospitals are having in properly staffing their facilities, hospitals are investing in technology where inpatient healthcare can be provided in the patient’s own home. The Mayo Clinic estimates that in 2023, 20% of their patients will experience inpatient care at home; that will increase to 40% of Mayo patients by 2025. 

For more information on this topic or to learn how Baker Tilly’s healthcare specialists can help, contact our team